Realising the need to make available affordable devices in rural areas to promote a ‘cashless economy’, the government has asked local handset makers to come up with smartphones costing less than Rs 2,000 that can enable financial transactions.
According to an Economic Times report, the government, in a meetig held recently by Niti Aayog, has asked home-bred handset makers inlcuding Micromax, Intex, Lava and Karbonn to build low-cost phones that are capable of making digital transactions.
While the government didn’t approach Chinese manufacturers for this project, large multinationals such as Samsung and Apple did not attend the meeting.
“The government has begun enabling digital transactions, which are growing exponentially now, but they realize that there aren't that many low-cost smartphones in the market,” One of the three senior executives aware of the meeting was quoted by Economic Times as saying.
The report further cited the two other sources saying that the government is pushing handset companies to pump in 20-25 million handsets into the market, but has ruled out government subsidy. Instead, it is asking companies to come up with solutions to bring down the cost of the phone, which has capabilities to allow financial transactions.
“The government’s aim is to allow financial transactions from anywhere, devices which should also have the ability of scanning for Aadhaar-based financial transactions in the future,” said the second executive.
Meanwhile, industry insiders said that it is first necessary to address key challenges for the project to start and the foremost is keeping the cost of the phone low while finger-print scanner, high-quality processors and ensuring build quality.
As of now, only around 300 million of India’s about a billion phone users have smartphones. Also, rural areas have a teledensity of just above 50 per cent, compared with over 200 per cent in cities like Delhi, highlighting the disproportion in mobile phone usage.
After the demonetisation drive, mobile payment systems will play the primary role in this shift, which is why the government has launched the Bharat Interfact for Money (BHIM) app, a platform that connects 31 banks using UPI. The app has been downloaded more than 1 million times.
But since the app and other UPI-based payments require smartphones, with internet connection, the reach of the app will remain restricted unless more people have phones that are data-enabled.